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The biggest problem I have with insurance is the inherent disproportionate power relationship between the company and their customer. Essentially, the moment a

• debacle 9y ago
  > the moment a customer becomes more trouble than they are worth, they are dropped. Insurance is a business. I don't think any business would want customers that are more trouble than they are worth. > they are too protected by our legal system for them to not do it. Solving the risk issue with patients who will never be able to afford their healthcare is not an insurance problem. These people are uninsurable. There's a known cost to pharmaceuticals associated with being a hemophiliac. There's a known cost to the outpatient care associated with kidney disease. There's no "risk" associated with those costs. We need to re-frame the discussion around socialized healthcare, not health insurance. Health insurance, apart from high-deductible, low-cost plans, doesn't exist. The US already has socialized healthcare, the problem is that it is a split private/public model.
  • FabHK 9y ago
    > Insurance is a business. I don't think any business would want customers that are more trouble than they are worth. But insurance is precisely the business of taking money from everyone that's exposed to a potential loss (namely the expected value of that loss, plus some more to cover administration cost and profit), and then distributing it to those actually suffering the loss. If the insurance then turns around and kicks those affected out, it is reneging not only on the spirit of the contract, but on its entire raison d'être. Agreed, though, on your later point that in the health domain, certain risks, once they've occurred, are so massive that traditional (private market) insurance structures might not be really suited to them, which is why nearly the entire developed world has some sort of public health insurance, fortunately.
    • InitialLastName 9y ago
      > which is why nearly the entire developed world has some sort of public health insurance, fortunately. "That 'nearly' is a real killer" - Somebody from the "nearly"
    • seanp2k2 9y ago
      Yep, but as long as they're for-profit and the people making decisions there are allowed to prioritize increasing shareholder value above minimizing human suffering, I don't think it'll change.
    • ams6110 9y ago
      > If the insurance then turns around and kicks those affected out, it is reneging not only on the spirit of the contract, but on its entire raison d'être. It's not reneging, assuming they make you whole on the loss. If I wreck my car, and I have insurance, I will be reimbursed for my loss. There's no expectation at that point that I will necessarily keep my coverage, or keep it at the same premium, now that I have demonstrated that I am a higher risk. For health insurance, it's a bit different because some diseases can't be cured, and it's harder to put a dollar amount on the "loss" incurred. For example, if I develop diabetes, that may be something that has to be managed for the rest of my life, and has various other side effects such as circulatory problems. But, we have data; there are lifetime averages for this sort of thing, and they can be computed into the actuarial risk profile. As long as you acquire the insurance before you incur the loss, the model works. > nearly the entire developed world has some sort of public health insurance We should not call it insurance when that's not what it is, though. If you have a disease (preexisting) the insurance model doesn't work, any more than it would work to sell homeowners insurance to people whose houses are currently on fire. The risk of loss to the insurer goes from "actuarial probability" to "100%"
      • rocqua 9y ago
        The solution to preexisting conditions is usually mandated coverage. This way, since you always have insurance, you can't be blamed for only getting insurance when you need it. This still doesn't allow people who get a condition to upgrade their insurance. Allowing this amounts to socialized health-care. An alternative is to make such coverage part of the mandatory package. This way, it is still insurance. This is only as socialist as insurance inherently is (i.e. the unlucky being covered by the lucky). The big issue here is 'liberty', but if you hold that no-one should die because they cant access health care, and don't want to make healthcare free, mandated insurance is the only option.
• nostrademons 9y ago
  Or to be socially-connected to organizations that the health insurance company doesn't want to piss off. My family wasn't rich at all growing up, but we never had a problem with health insurance, because my mother worked for the government. The one organization that insurers will never piss off is the federal or state government, because then they will lose the right to do business in that state. I do think that this increasing preference for the rule of power over the rule of law is pretty disturbing, and makes a mockery out of the claim that we live in a democracy. Sure we do...if you have leverage over the companies that would violate your rights. But that's the very definition of corruption, when you need to rely on inside information, relationships, or other proprietary tools to get people to do what you want, rather than your rights as a citizen.
  • socrates1998 9y ago
    yes, insurance companies are very corrupt. I would say they are inherently corrupt given their place and power in our system. I don't have a solution other than don't get sick or have a car accident.
    • nostrademons 9y ago
      I'll take advantage of us having the top commentthread to pose a question to the HN audience: Would you rather live in a society where everyone has a right to medical care regardless of their social standing or financial wherewithal, but some people will die because of bureaucratic incompetence or because the person who could've saved them has no incentive to? Or would you rather live in a society where medicine can work miracles, even the most debilitating ailments can be cured, but only if you happen to be rich? The former is (to a first approximation) what you get with European-style single payer. The latter seems to be where American health care is headed. There's no situation where everybody can be saved, simply because we're all going to die in the end anyway, but the distribution of who dies and from what can be changed by different policies.
      • chimeracoder 9y ago
        > The former is (to a first approximation) what you get with European-style single payer Aside from the fact that most European countries - even those with government-mandated healthcare - do not have single-payer insurance, this is a false dichotomy that ignores the global market dynamics. Just as Medicare in the US could not operate in its current form without the existence of the private market to implicitly subsidize the public system, European countries would have a very different healthcare story in the absence of the US market. Nobody likes to admit it, but there's a reason that the US is the source of over half of all direct biomedical and pharmaceutical research worldwide, including research conducted by European pharmaceutical companies. These companies use sales on the US market as the source of funds for the research that all countries benefit from, and in the absence of the US market, either those costs would be borne by Europe, or that research would simply not happen[0]. They also pull funding from the US market via other, less direct means. Yes, the US system has massive problems, and yes, it could and should be cheaper. But you can't analyze these as binary options in isolation, because they're not binary[1], and they're not operating in isolation either. [0] If you want to make the argument that Europe could come up with a system that pays for this research in the absence of the US market, fine, but then you have to explain both why that would not simply recreate the same expenses, and explain the fact that, so far, that system has not been created even by the European pharmaceutical and biomedical companies. [1] The UK has four main payers; the Netherlands doesn't even have single-payer at all, and so forth.
• wuch 9y ago
  Given that insurers so far have been unsuccessful in legislating requirement for a customer to hand over any DNA test they have performed, it seems quite sensible solution that customer gets dropped, as otherwise they could exercise information asymmetry to their benefit, and great peril of insurance provider. Of course this is sarcastic, but argument about information asymmetry, created by DNA testing, that supposedly threatens the existence of insurance business is quite real.
• fanzhang 9y ago
  I think you're confusing "health insurance" which has a strong social redistribution component, with pure insurance, which is a business transaction to pay off on the chance something happens. Pure insurance is when a consumer buys a Playstation for $300, and then pays $5 for an extended warranty, or when a company insures their office building against a fire. I don't think your arguments apply to that. In such a case, is there unacceptable social harm if a insurance company determines I'm really bad at taking care of my Playstation, and refuses to insure me? Is a company that badly off if they need to write down the cost of a building if it gets burned down? Is all insurance a social right? I feel that health insurance has the strongest claim to this, because it's not a pure business transaction and it's about who we're letting die in society.
  • jogjayr 9y ago
    > Is a company that badly off if they need to write down the cost of a building if it gets burned down? That means a company has to always keep cash in reserve against the off-chance of its building burning down just because insurance can't be trusted. That's money that can't go into expanding the business and creating additional jobs. Imagine the overhead of this parked money across thousands of businesses. Not to mention a lot of startups or young businesses can't have that sort of cash position, which means it becomes another barrier to starting businesses. It would be a major impediment to the economy.
    • emilecantin 9y ago
      Even worse, if you have to account for that possibility, why buy insurance in the first place?
  • losteric 9y ago
    I think fair and transparent business contracts are a consumer right. Insurance is statistical in nature, and contracts should be required to explicitly outline the scope of coverage. If I’m paying $5/m for coverage of manufacturing issues with my Playstation, I expect any manufacturing issues to be covered. I would also expect an extremely unlucky customer to receive multiple device replacements without any change of premium - because the contract and price should reflect the expected failure rate of the device (plus overhead + profit). In that example, it should be illegal to boot an honest customer after the first failure… the only reason to do so would be because the insurance company set an artificially low rate that doesn’t reflect the ammortized rate of manufacturing issues. In other words: the business is breaching contract by charging me for a different service than I’m getting. Although, given the clear scope of coverage, proof of malfeasance is justification to both refuse payout and ban the customer. However, if I’m paying $5/m for unlimited coverage, I expect unlimited coverage. That rate is expected to cover idiots that keep their Playstation on a fireplace, and perfect people that never move the device from a cool location away from vibrations and interference. Again - if I get kicked after the first failure, that’s failse advertising. Of course there are people that will microwave their device for fun and demand a replacement - the rate should include those people, or the contract should not offer unlimited coverage. Businesses are free to not offer unprofitable coverage, but consumers have an economic right to demand that businesses honor contracts. I’d argue that consumers also have a right to accurate advertising - if the “unlimited coverage” plan has fine text that says “manufacturing issues only”, well, that’s not really above-board.
• DanBC 9y ago
  > is the inherent disproportionate power relationship between the company and their customer. And the principle of "utmost good faith", which insurance companies abuse to remove cover after a claim, unfairly disadvantages many people. https://en.wikipedia.org/wiki/Insurance_law#Utmost_good_faith https://en.wikipedia.org/wiki/Insurance_law#Utmost_good_fait... https://en.wikipedia.org/wiki/Uberrima_fides https://en.wikipedia.org/wiki/Uberrima_fides
• forgotmypwd 9y ago
  > "Essentially, the moment a customer becomes more trouble than they are worth, they are dropped [by the insurance company]." In healthcare there are many different models, but one popular one is the concept of an ASO. This is the case where a healthcare insurance company (think Anthem) will provide administrative services only (ASO) and not (ultimately) be financially responsible for paying claims. The group responsible, in this ASO relationship, is generally an employer. This is actually fairly common and in it the insurance company has no incentive to drop a "customer" (member), even if/when they legally could. There is a lot of "bad" in the health insurance industry, but there is also a lot of "good" - people working from the inside who are trying to make things better for members/individuals. Things like improving quality of care, managing coordinated care models, identifying medical risk (eg. opioid abuse), etc. I think first people need to better educate themselves on how the industry currently works, where the problems are (there are many), and where the more positive efforts are being made in the industry. Bottom-line - don't write it off, but get better informed and try to contribute.
  • socrates1998 9y ago
    What you are proposing,"get better informed and contribute", doesn't many any sense. "get better informed" about what? How insurance companies take advantage of poor people? Even if I know all the laws and regulations and details of my policy, if I don't have the money (hire a lawyer) to fight it, then I am screwed. And this has happened to me. I was in the right, but my insurance company ruled against me, I complained and they basically told me to hire a lawyer if I didn't like it. And "contribute"? what is that? Contribute money? You still don't have a solution for the problem, insurance companies having asymmetric power (via information and money and legal influence) in the customer relationship. They collude with other insurance companies to create complicated policies that you can't negotiate or understand, but are forced to have legally. It's billion dollar powerful and well connected corporations vs. one person. Not exactly a fair fight.
    • forgotmypwd 9y ago
      My point being that you can contribute by demanding your state or federal government officials write or support laws that change how health insurance companies are allow to operate - or - by joining the industry and fixing it from the inside. Your argument is an emotional one, and that is fine, but it does not help to _realistically_ approach this problem.
• raquo 9y ago
  Re: health – that's because what you really want is a single-payer health care system funded through taxes, not commercial health insurance, but your country's ideology does not allow for that.
  • pedalpete 9y ago
    I think you are making some big assumptions about what Socrates wants. There are other possibilities. I live in Australia where there is a dual system, I'm from Canada which has public health care. Limiting your thoughts to make assumptions about the original poster is limiting your potential to see opportunities.
    • raquo 9y ago
      I am not making assumptions. I'm providing my own opinion that the problems he mentions are best addressed by funding healthcare with taxes instead of having an insurance system.